Latest / The Accounting Podcast / Jamie Shulman on Xero acquiring Hubdoc and the generational accounting shift
Transcript
- Jamie Shulman: Right now, we're in a once-in-a-generation shift in accounting. 30-plus years ago, my dad would talk about going from paper to desktop software, and that was a big development. Here we are now, roughly 30-plus years later ... This idea of shifting from desktop to the cloud, and ultimately, to bring on automation, it really is, effectively, a once-in-a-generation shift, and it's just getting going. It feels like there's even a bigger kind of industrial shift here around digitizing [00:00:30] the world of business, and accounting, as part of that. Blake Oliver: Welcome to The Cloud Accounting Podcast, for a special exclusive breaking-news edition. I'm Blake Oliver, and we're talking today with Jamie Shulman, co-founder, co-CEO at Hubdoc, an automated document-collaboration platform that pulls bills, receipts, and statements into one secure hub; extracts the key data, and then, pushes those documents wherever you want 'em to go, especially your accounting system, and general ledger. The big news is that Xero is acquiring Hubdoc, in a deal valued at $70 million, to [00:01:00] be completed this month. Jamie, thanks for being with me, and congratulations. Jamie Shulman: Thanks, Blake, and thanks for having me. Blake Oliver: Yeah, I know that it's very busy right now. You're about to head off to ... Is it London you're going to? Jamie Shulman: Yeah. We've got people on the team going to Sydney, Australia, right now, and then, a couple of us are going out to London, and the rest are staying here in Toronto to serve the North American market. Yeah, it's a little frenetic, but incredibly exciting. Blake Oliver: Really [00:01:30] exciting for Xero users. I, myself, have been using Xero since pretty much they came to the United States, so, exciting to see this happen. I've also been a longtime Hubdoc user. Very, very happy for you guys. My question for you is how did the whole Xero acquisition come about? It kinda just seemed to spring out of nowhere, but I'm sure that you were talking for quite a while, and I'm curious to know how did it happen? Jamie Shulman: Yeah, I can talk at length about this, but I'll try, and keep it succinct. I [00:02:00] guess, in short, when Jamie and I ... When I say Jamie, and I, referring to the other Jamie, obviously. When he, and I started Hubdoc, it was actually ... The genesis, the idea, came from a previous business that we had run, and started running, and ultimately sold. That was that we were frustrated doing the books in our business, and this was in the period of 2007 to 2010-2011. We had a bookkeeper, off-site, who was using a desktop software [00:02:30] to manage things. It was a lot of back-and-forth administrative work to try, and get our books done, and they were typically done month after month. It was really frustrating. We set out to try and see if there was a better way to do one's books. At the very start, we discovered Xero. That's why I mentioned this, is because we discovered Xero, and we discovered bank feeds. This is back in, I guess, 2011. We thought, "Well, that makes a ton of sense to have just the transactions flow into a GL ..." Our initiation, [00:03:00] our introduction to Xero was back when we first saw the product. Then, when we hired a team, and started building out what Hubdoc has become, we, at the start ... I don't know, Blake, if we've ever told you this, but we actually got our first customers by essentially scraping the Xero directory, at the time. Xero published a directory of a lot of its customers, and we just went on that directory, and found people that were savvy, like yourself, and others that were kind of forward-thinking modern practices, and we figured they would be interested in our software, and the automation that we brought. That's [00:03:30] where it all started was, we ... Early on, our first, and longest-standing now, customers are from the Xero ecosystem. Then, as we moved ahead, we're agnostic, in terms of which general-ledger software we support, and we integrate with many pieces of software. It all started with Xero, and then, over the years, when we would see Rod Drury at conferences, and the rest of his team, there was just discussions around how to partner more deeply. We are quite aligned, in terms [00:04:00] of our brand, and our values, and how we approach customers, and approach building a business, and so, ultimately, it was a bit of a natural fit, because we just ... Whenever we met, we talked about how we could do more, and do more, and do more, and ultimately, this occurred. Blake Oliver: You mentioned that you are platform-agnostic, and that has been one of the questions, after this acquisition, for a QuickBooks Online users, in particular: are they going to be able to continue to use Hubdoc? should they be worried at all? Jamie Shulman: They absolutely [00:04:30] should not be worried. It's much more than that, but, first, yes, of course, they can continue using Hubdoc, and using Hubdoc with QuickBooks Online, or QuickBooks Desktop, for that matter, and there should be no worry at all. What's interesting about this is ... I mentioned that story how we started with Xero, but we've become very close partners with Intuit, as well, and we respect what they've done, and where their business has gone, and they have loyal customers, as well. We have many customers, who are these accounting [00:05:00] firms, and bookkeeping firms, and their staff, and their clients use Hubdoc with QuickBooks Online. We will continue to serve all of our customers in the same way. We've had a ton of outreach from customers, everything from congratulations to a question about, "Yeah, can we continue to use Hubdoc?" They should actually have confidence that they will be able to. We've also talked with the people at Intuit, at various levels, and they've been incredible. I really respect them, their people, [00:05:30] and specifically, the accountant’s teams, and the folks that work with the QuickBooks Online team, where we have ... They've not only reached out to us, and talked about how they're gonna continue to support our mutual customers, but just how all of our constituent, number one, is the customer, so we should all feel confident that ... It's not just Hubdoc, but also Intuit are gonna continue to support our mutual customers, going forward. Blake Oliver: Is Hubdoc remaining a separate entity? Are the Hubdoc employees gonna become [00:06:00] Xero employees, or did they stay Hubdoc employees? How is all that gonna work? Jamie Shulman: Yeah, I don't know, ultimately, how it'll all shake out, and how things will evolve, but right now, we're staying as a standalone company, and Hubdoc employees are Hubdoc employees. Who knows where it'll all head, but, for now, it’s ...? Although things have changed, a lot of it's staying the same. Blake Oliver: One of the benefits of the acquisition that Xero cited on their blog is the potential for a deeper integration, which is very interesting, given [00:06:30] how difficult data capture is in the United States, and the North America market. Not a lot of people using electronic invoicing; still a lot of paper checks, paper bills. That is, I think, as a user, why I suspect that Hubdoc has been so successful. What can you tell me about any potential deeper integration? What might that look like, or is it still just a thought in the wind? Jamie Shulman: Yeah, I would say, to start, that we'll ... We continue to work on all of our integration. We have integrations with many pieces [00:07:00] of accounting software, as well as cloud-storage platforms, like Box, or ShareFile, or Google Drive, or Dropbox etc. On the Xero integration side, I would imagine there will certainly be ... We will be going to more depth with that integration, and there's all sorts of ways that could go. We have ideas; they have ideas. Ultimately, it'll be mostly what customers are seeking. Blake, you'd be the first to have the best ideas on that front, but I really don't have anything specific I could talk about today, but [00:07:30] we're absolutely continuing toward general integrations. Also, more specifically, on that deeper Xero integration, because, you can imagine ... Well, you have a sense of what we could be doing there, and there's so much upside ahead of us. We're just kinda getting started. Blake Oliver: Last question: what is next for you, and Hubdoc? Jamie Shulman: Oh, that's great. Well, I'll start with me, and I'll bring the other Jamie into this, too, because we're a team. We are both excited/thrilled/fired up with [00:08:00] what's ahead for Hubdoc. We're staying here. We're gonna be here for a long time. There's nothing ... Some people have asked us, "What are you gonna do next? Are you gonna start another company?" No, we're staying with Hubdoc, and we're incredibly excited about what lies ahead. Blake Oliver: I would say, more generally, for Hubdoc, it really is early innings, and, Blake, I know you know this, we're deep into it - all of us, and maybe some of the people that might be listening to this - where we feel like, "Oh, cloud accounting's here, and it's all ... It's [00:08:30] a mature market." Jamie Shulman: It really isn't. We see this every day, that it's early days for cloud accounting, and for automation. I would say ... It's interesting, I was on the weekend with my parents, because it's their 55th wedding anniversary. My dad was an accountant, and we talked about this. Right now, we're in a once-in-a-generation shift in accounting. 30-plus years ago, my dad would talk about going from paper, to desktop software, and that was a big development. Here we are, now, roughly [00:09:00] 30-plus years later ... This idea of shifting from desktop, to the cloud, and ultimately, to bring on automation, it really is, effectively, a once-in-a-generation shift, and it's just getting going. I think, at a broader level, if I can risk being a bit dramatic, it feels like there's even a bigger industrial shift, here, around digitizing the world of business, and accounting as part of that. A lot of what we do here is save people time, and drive streamlining processes, and moving [00:09:30] away from paper, to digital. I think there's this bigger shift at play, and we're just getting going. I think you and I have talked about this before, but, in a world of automation, where so much of what we'd once been doing, at an administrative level - for example, gathering receipts, and coding them - it can now be automated. In a world of automation, it's critical that the relationships continue to be formed; that one [00:10:00] can assist businesses; that the automating of the administrative tasks are really just one piece. Ultimately, the need for a guide, or advisor, is even more important. Our goal here is just to help firms, and professionals survive in this world of automation that's inevitable. Blake Oliver: That's such a great point. The fact that we're at the beginning of this shift ... We're just at the beginning ... We're at the end of the beginning is another way to put it, and it's easy to lose sight, for those who have been using cloud apps for the last 5 to 10 years. It's [00:10:30] easy for us to lose sight that, maybe we're, at most, 5-10 percent of the market, right now. Jamie Shulman: Exactly Blake Oliver: We've done surveys here, at FloQast, of accounting teams. We find that, while more than 50 percent are using some sort of cloud tool, most of them are not integrated. Only about 10 percent of teams are fully integrating all of their applications, and automating, and data entry, removing that stuff. Still tons, and tons of opportunity in the marketplace for more [00:11:00] users of Hubdoc, and just more users of all sorts of cloud apps. Jamie Shulman: Yeah, and this move towards efficiency, and automation, and streamlining business processes is just getting going. We have a closer view of the Australian market, right now, given our relationship with Xero, and now, this transaction. It's interesting ... I think one would say that they're probably a good couple two or three years ahead of North America, in terms of streamline processes, and you can see that. As an example, I [00:11:30] live in Toronto, but I've lived in San Francisco for seven years. We still all write checks, too much. In Australia, nobody writes a check, as an example. [crosstalk] are much more automated. There are examples like that, where we can see where things are going, by even looking at a region like Australia. It's just gets exciting, because ultimately, as I was saying, for a business, it comes down to these businesses having better visibility, and insights into how one is doing. It's super-important; it's just hard to do that now, but, in a world where that's done, [00:12:00] to some extent, automatically, you can now have someone help you look at your business more thoughtfully, and that's all good Blake Oliver: Jamie, that's about all the time we've got. I know you need to make it to the airport and get over to London. For those who are not familiar with Hubdoc, where can they go online to connect with you, and learn more about what you do? Jamie Shulman: Hubdoc is H-U-B-D-O-C, so whether it's Hubdoc.com, or @Hubdoc on Twitter, Hubdoc, on Facebook, etc., those are probably the easiest ways to go. We're there all [00:12:30] the time, so we welcome anyone who's interested in learning more. Blake Oliver: Thanks, Jamie. Jamie Shulman: Thanks, Blake, appreciate it. I'm a Canadian, and I moved to San Francisco, and lived there for seven years. When I moved to San Francisco, I went to get my driver's license, so I could drive in San Francisco. I had my Ontario ... I had my Canadian driver's license. I went, and I'd just passed the written test. It was tough, but I just passed it. I went up to the counter to get my driver's [00:13:00] license. I was at the DMV, and they said to me, "Okay, great. Well, you're gonna need to do a driving test." I said, "Do a driving test? Why would I need to do driving test?" She said, "Because you're from a foreign country," and I said, "Why does that make a difference?" She said, "Well, you drive on the other side of the road in some foreign countries." I said, "Well, but not in Canada," and she said to, "How do I know that?" I said, "Well, I just told you." Jamie Shulman: She said, "I don't have all day here," and there are people behind me in line. She said, "Are you gonna do this [00:13:30] driving test, or not?" I said, "I guess I am. How long you think this will take?" She said, "Well, you can't do it now. I'm booking in October." I ended up having to look up drivers, as I couldn't drive for the next six to eight weeks, until that appointment, and then, ultimately, had the driving test. I don't know why that story was funny to me, but it just reminds us that different regions of the world are different, and people have different global perspectives. Blake Oliver: Yeah.